Promotion Dilemma: Is It Fair to Shift Assured Pay to Incentives for a New Role?

Hi,

For a promotion case, can we deduct x amount from assured pay and show it as increased incentive for the new role? Is this practice correct?

Thank you.

YAGS06

If it is part of your employment contract, i.e., CTC, in such case, it is part of the salary.

R D Watve

CTC says that this is apart from assured pay, coming under earning potential. When we joined this organization, we were hired on assured pay only. Over a period of time, the system changed and started paying incentives based on good performance. This has always been apart from your basic salary, HRA, statutory bonus, FBP, etc.

Question on Assured Pay and Incentives

Now the question is: Can a company deduct a part of your assured pay and show it as an increment in incentives? They are even asking us to sign a consent letter.

Dear Yags06,

Let us understand the different terms and definitions here:

1. **Promotion** – A promotion indicates an upward movement in a grade and salary structure due to an increase in job scope. E.g., Technician to Senior Technician.

2. **Assured Pay** – Also known as Base Pay, it is a guaranteed pay to reward the jobholder for the expected job scope. E.g., a Technician is paid S$1200, while a Senior Technician with a larger job scope is paid S$2000. Base pay is job-scope driven.

3. **Incentive** – An incentive is variable pay linked to performance or improved performance. E.g., an increase in productivity leads to a productivity incentive payout. Incentive is not a component of Base Pay. However, the summation of Base Pay, incentive, and other performance-linked variables will derive Total Cash or CTC, which is your earning potential.

To answer your question:

x amount from Base Pay CANNOT be deducted to show increased incentive in a promotion because even though you have been promoted to do a bigger job, your guaranteed pay has just been reduced, and you have to earn it back by meeting a bigger productivity quota.

This is an unlawful practice, and you should not sign any document until all your concerns are addressed by your HR.

Regards,
Autumn Jane

Incentive is non-committed CTC as it varies depending upon the performance of the individual.

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Incentive is a non-committed component of the Cost to Company (CTC) as it varies depending on the individual's performance.

Thanks, Autumn Jane. One catch is that for a period of 3 months, the new role is under a training period. During this period, on one side, they are not increasing the salary structure (upgraded) for the training period, and on the other hand, they want to increase the incentive by deducting from the base salary.

Now, do we have to add on something in the previous statement, or do we still have a genuine concern?

Dear Yags06,

Salary Administration: Annual Increment, Promotion, and Incentive

Annual increment, promotion increment, and incentive are part of salary administration. Different organizations may have different policies and procedures, but in general, these are a few options:

1. A promotion can only take place when employees have consistently, over a period of time (usually 2-3 years), not only met but exceeded expectations.

2. Option 1: Promotion Letter and New Salary

The promoted employee receives a promotion letter detailing new job scopes, a new grade, and a new salary range with an effective date. The effective date can be with immediate effect or back-pay depending on the arrangement between the employee and the company.

3. Option 2: Training or Probation Period

The promoted employee needs to go through training or "probation" to be competent. They may continue to receive the existing salary and get back-pay.

4. Option 3: Acting Allowance

The promoted employee receives an "acting" allowance in addition to the existing salary during training. This allowance can be taken away if the promotion does not materialize or be formally given as an increase in base pay if the promotion takes place. In this instance, communication is key.

Whatever option is chosen, no cutting of the base salary is allowed if it is a clear case of promotion.

Regards,
Autumn Jane